Praveg share price tumbles 7% to hit 5-month low on weak Q4 earnings

Praveg, a prominent eco-responsible luxury resorts company in the country, witnessed a 7% decline in its shares during today's intraday trade, hitting a 5-month low of ₹805.10 apiece, following its Q4 and FY24 results, which failed to meet market expectations.

The company released its financials post market hours on Monday, posting a significant decrease in its consolidated net profit for both Q4 and FY24. The company reported a net profit of ₹1.63 crore, marking a 68.15% decline compared to ₹5.17 crore in Q4 FY23, while revenue from operations surged by 76.3% YoY to ₹33.49 crore.

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The decline in net profit was attributed to a substantial increase in expenses, driven primarily by higher depreciation charges and finance costs associated with the establishment of new resorts, which contributed significantly to the overall expenses.

Moreover, its events and exhibitions segment underperformed, generating ₹1 crore in Q4 FY24 compared to ₹5 crore in Q4 FY23. The company is focused on revitalising this segment and remains optimistic about a turnaround in the upcoming quarters.

On a positive note, the robust growth in the top line was fueled by the expansion of operational properties and optimal utilisation levels achieved at resorts. The hospitality business played a key role in this growth, contributing over 96% of total revenues, with a remarkable YoY increase of 133%.

The company anticipates margin improvements going forward as these properties reach full operational capacity. Strategic investments in resort and hotel properties designed for year-round operation are expected to drive sustained growth, the company said in its Q4 earnings report. 

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Operational resorts demonstrated impressive occupancy rates of 51% during the quarter, coupled with a noteworthy average daily room rate ranging from ₹7,500 to ₹12,000. 

Starting the year with three operational resorts at a 44% occupancy rate, Praveg expanded to ten operational resorts by the end of FY24. The company expresses confidence that these occupancy levels will continue to rise with the launch of new luxury properties in FY25.

In the quarter, the company opened the Praveg Tent City in Saryu, Ayodhya, featuring 39 tents. Additionally, it secured a work order for luxurious tent resorts on Lakshadweep's Bangaram and Thinnakara islands, which will comprise 350 tents.

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Moreover, the company unveiled the Safari Velavadar Retreat in Gujarat, offering an exquisite experience for guests. 

Meanwhile, the net profit plummeted to ₹13 crore in FY24, marking a 54.27% decline from ₹28.43 crore in FY23. On the other hand, revenue from operations witnessed an improvement, reaching ₹94.55 crore in FY24 compared to ₹84.85 crore.

Multibagger returns

The company's shares experienced significant investor interest in January and February, propelled by several positive developments. Notably, in the Union Budget 2024-2025, the government unveiled plans to enhance tourism infrastructure and amenities in Lakshadweep, aimed at boosting domestic tourism and fostering employment opportunities.

In January, the stock surged by 33% following Prime Minister Narendra Modi's visit to Lakshadweep, where the company holds a significant presence and enjoys strong order inflows for luxurious tent resorts. These developments propelled the stock to record highs at the beginning of 2024.

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Over the last four years, the stock has soared from ₹18.20 apiece to its current trading price of ₹805, representing an impressive gain of 4323%.

Praveg is the pioneer in the non-permanent luxury accommodation segment in India, and it is also a strong player in event management. The company's association with Lakshadweep projects and the positive outlook expressed in the budget have reignited investor interest, leading to a notable uptick in today's session.

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